Mortgage lending falls 32% as prices slump

Gross mortgage lending slumped by more than a third in the year to June as the rate of house price growth slowed from 3 per cent to 0.6 per cent.

The Council of Mortgage Lenders (CML) said today that gross mortgage lending in June fell to £23.6 billion, down by 4 per cent on May.

During June, the value of home loans to first-time buyers fell by 9 per cent to £2.3 billion while mortgages to existing homeowners also decreased by 9 per cent, to £4.7 billion.

Annual house price inflation fell from 3 per cent in May to 0.6 per cent in June, according to figures from the Department for Communities and Local Government (DCLG), based on completed house sales.

The DCLG also said the average house price declined from £216,625 to £215,029 between May and June.

It emerged today that the average number of property sales handled by surveyors across the country over the past three months tumbled to 14.4, or fewer than five a month, according to the Royal Institution of Chartered Surveyors.

This is the lowest rate for almost 40 years.

The level of deposits that lenders are asking homebuyers to provide increased in June, as banks continued to turn the screws on borrowers.

According to the CML, the average homebuyer put down a 22 per cent deposit on a new property in June, up from 20 per cent in May, and borrowed 2.94 times their income, down from 2.97 the previous month.

Bob Pannell, head of research at CML, said: “Mortgage lending activity remains relatively weak and will decline further in the coming months as a result of funding constraints and lower consumer demand.

“The majority of lending continues to be to people with larger deposits, which is prudent for borrowers and lenders in a slowing housing market.”

Source: Timesonline.co.uk